Realty Bites

Articles 11.18.11

2011-11-18T12:56:00.005-05:00

A Primer on Walking in the City

Any time I get stuck behind a group of tourists crawling three abreast down Fifth Avenue staring up at the skyscrapers and stopping every 10 feet to take pictures, I think to myself that every tourist should be given a primer on how to walk in New York. The next best thing would be to give them all a copy of the article "A New Walking Code of Conduct".

Vacant by Design

A recent article in the New York Times told the story of property owners of four five-story walk up buildings in Harlem who have rented out their ground floor retail space but have boarded up the upstairs apartments and are leaving them vacant. The reason: the rents they were getting for the apartments barely covered their costs. It made more sense to keep them vacant then to rent them out. Housing advocates have decried this situation because of the blight it causes on the neighborhood and would like to find a way to encourage the landlord of these properties to offer more low and moderate income housing. What the advocates fail to realize is that the cost of operating residential real estate is not just a function of the usual operating costs such as fuel, taxes and insurance but, in New York, includes the cost of complying with volumes of building regulations, rent regulations, and dealing with a court system that makes it virtually impossible to evict nonpaying and illegal tenants (even those who blatantly flaunt the laws by operating their apartments for illegal uses). My suggestion: make it easier for owners to operate low income and moderate income apartments by eliminating many of these regulatory obstacles and make it much easier to evict illegal and nonpaying tenants.

Electric Cars

As these two photographs demonstrate, the infrastructure is beginning to be created to allow electric cars to operate around the city.

The Virtuous Cycle of a Successful City

I recently attended a symposium celebrating the 50th anniversary of the enactment of the 1961 Zoning Resolution. There were some terrific presentations made. Of particular interest to me was a description by former First Deputy Mayor Dan Doctoroff of what he called the "Virtuous Cycle of a Successful City" which he described as follows:

Quality-of-life

Invest in the city

More people come

More money

A very simple but insightful analysis.

Articles 09.16.11

2011-09-16T18:12:00.005-04:00

Leadership (RIP August 25, 2009)

August 25, 2009. That is the day when leadership in our country died. Not uncoincidentally, it was also the day that Ted Kennedy died. Regardless of whether you agreed or disagreed with his politics, Ted Kennedy was a powerful leader. He was able to rally Democrats around his causes and forge the alliances with his Republican rivals to achieve significant legislative victories. His death has left a serious power vacuum in Washington. Our country is suffering terribly as a result. This is not either Democratic or Republican issue but a malaise that has infected both parties. Our current crop of politicians are more concerned with making their adversaries look bad than they are with doing right by our country. And as election season gets into full swing it will only get worse. At a time when our country is suffering from a stagnant economy and lack of job growth while fighting two separate wars; and while a number of our allies in Europe are close to economic collapse we need leaders from both parties to step forward and call upon their colleagues to cease the politicking and to get to work to forge the policies necessary to address these numerous crises. Who do we have the blame for this? Only ourselves. We continue to elect and reelect these political hacks. It is time for us to hold our elected representatives accountable and tell them that it is time to stop the nonsense and to start to lead. We can do this by supporting and electing those politicians who have the courage and the foresight to work with members of the opposition to do what is right for our country.

How to Rattle A Company's Cage

We've all suffered from awful experiences with products and services (if any of you have flown recently you know what I am talking about!) Most of us simply get annoyed, mutter to ourselves and go home and kick the family dog, but little else. This article provides a pretty good framework for how to complain effectively and get the results that you desire.

Washington Square Park

Growing up in the city I adored hanging out in Washington Square Park. It was a great refuge from the asphalt jungle and there were always some cute girls to flirt with and interesting activities going on.

Unfortunately, the Park fell into a terrible state of disrepair and became a hangout for derelicts, drug dealers and degenerate chess players. The grassy areas had become bald patches of dirt, the swings and benches were damaged beyond repair and the fountain no longer worked. Worse, the majestic symbol of the park, the Triumphal Arch that would greet you at the end of Fifth Avenue and welcome you into the Park, had become a pockmarked, graffiti covered eyesore. After several years of renovations I am pleased to see that the park is once again a beautiful oasis. It is a great place to hang out and watch kids play in the fountain, listen to musicians perform and to people watch. Take a look.

The Silver Spoon Dilemma

The title of this article says it all.

The Looming Crisis

Government debt, overheated economy, lofty valuations for loan collateral, too many people living in poverty, great disparities in wealth; sound like America circa 2008? No, this is China 2011. Is the largest country on the planet setting itself up for an economic collapse? If so, what does this mean to the United States and the ability of China to continue financing our country through the purchase of our debt?

Adventures in Parking

Are parking garage attendants soon to be obsolete? Take a look at this video "Auto motion Parking".

Speaking of Obsolete

Is our current mail service going the way of the pony express? This summer my 17 year old son worked in my office. He was asked by one of my brokers to address and mail out some flyers for him. My son did so but was shocked when all the envelopes were returned to our offices within the week. The problem… he did not stamp the envelopes. When I asked him why, he admitted to not realizing that stamps were required. He had never physically mailed a letter before!

Social Media and the :-) Face

Texting, Facebook and other forms of social media have now taken the place of verbal conversation as the preferred means of communication particularly among those who grew up with computers and cell phones. While I applaud any technology that allows us better access to each other I wonder if communicating this way is causing us to become emotionally detached. This form of communication does not allow us to communicate well our emotions and feelings. There is a lack of depth to the conversation that results from the lack of the nuance of tone of voice, facial expression and the like. The happy face icon that now seems to punctuate over written communication is a poor substitute for genuine human emotion.

In Remembrance

2011-09-12T08:40:00.000-04:00

I spent the morning today in Central Park thinking about 9/11. This morning's weather reminded me very much of the weather of that day. Vibrant and clear with a crispness in the air signaling the end of summer and the beginning of fall; a perfect September day. Far off in the background I could hear the melancholy tones of bag pipers playing a tribute to those who died. Their somber tones were a sad complement to the feeling of lost that I was experiencing. I felt an overwhelming sense of loss that day. I love my city, New York, very much and felt her pain that day as if I was the one who had suffered a painful and serious injury. Even though I was not close to anybody who died in the attack, I continued to experience a profound sense of loss for weeks, if not months, after the attack. There were constant reminders. Foremost, was the profound change in the city skyline. No longer was downtown dominated by the icon of the Twin Towers. Where once they proudly stood, there was nothing but a gaping hole, the skyline, once a beautiful smile, now permanently marred by the loss of its two front teeth. Then there were the missing person posters with the question "Have you seen this person" written over a photograph of a person missing in the attacks. These posters appeared all over the city, on lampposts, mailboxes and temporary kiosks erected for that purpose. And the photographs on them, typically of a person smiling at the camera often with a child or pet in their arms, gave a very human face to the tragedy we experienced. The victims were not just numbers but were real people that stared out at us from these posters imploring us to find and return them to their families. The hope, but really the despair, expressed in these posters was palpable, and I couldn't but help but think of the families who posted these signs and the all-consuming and always present anguish they were experiencing of not knowing whether a person they loved had perished that day. There were other images that I'll never forget as well. The men and women emerging ghoul like from the mist of the fallen Towers their clothes, hair and faces covered with a fine dusting of soot most with rivulets of blood spreading down their faces like slow trickles of water, not running, but walking heads down in anguished defeat. And then there was the smell. Acrid and vulgar, the smell of loss and destruction. It lingered over the city for many months, an ever present and inescapable reminder of the events of that day.

The city became very quiet the weeks following 9/11. Horns did not honk, once boisterous and loud voices were now replaced with muted and hushed whispers. Bus rides, typically a cacophony of conversations and cell phone calls, became eerily quiet. It was clear; we were a city in morning. Morning the people who worked in the Towers and died in the attack, morning the brave policeman, fireman and other first responders who selflessly sacrificed their lives to help others, morning all those who lost somebody they loved, and morning our lost as a country of our sense of safety and security. Our lives had been forever changed that day.

Our spirit had been tested that day by a horrible evil but through our courage and sheer will our city and country came together as a community and demonstrated to our friends and enemies alike our resolve to emerge from this tragedy better, stronger and wiser. Yet despite this, it is only appropriate that we set aside some time today to reflect on the events of September 11, 2001 and to offer our condolences to all those who suffered a loss on that day.

Articles 07.11.11

2011-07-11T09:55:00.021-04:00

How to Be a Good Manager
For any of you who must supervise or manage a group of people, I'm sure that you frequently feel like you're “herding cats” (not Katz -- that would be more like a Bar Mitzvah). The number of people in my office has grown substantially over the past several years and one of my toughest tasks is to make sure they are all being managed properly. It's always useful to read how other companies have successfully managed this process. I found the article "Google Rules" very useful.
How Well-intentioned Laws can stifle Productivity and Personal Growth
Several months ago, an employee told me about his desire to work hard and learn the real estate business. He was hired as an assistant property manager and had no experience in that area. But he was eager to learn and wanted to work after hours and on weekends to learn the trade. "Wonderful, I thought" but my HR department quickly snuffed out this flicker of ambition. Apparently, allowing him to do so would run afoul of federal labor laws that prohibit employers from allowing employees to work overtime without paying them additional wages (not just at their base rate but at a premium rate to reflect the fact that they are working overtime). It doesn't matter that it was the employee's desire to work overtime. Apparently, this is a requirement that cannot be waived. Further, it wasn't that the employee would've wound up working for less than minimum wage. He was paid well enough that even with the extra hours that he wanted to work he still would've been paid in excess of the minimum wage rate. As much as he wanted to work and learn as much as he could, and as much as I wanted to see him do so, there was no way of making this happen without opening up a huge can of worms. How stupid!
Wal-Mart Versus Your Local Bodega
The opponents of Wal-Mart (mostly unions and their supporters) are sounding the alarm that if Wal-Mart is allowed to enter the City it will gobble up all the local grocery stores and bodegas. So what?! Visit the neighborhoods that Wal-Mart is seeking to enter. These are neighborhoods that are in neighborhoods that are severely underserved by the larger supermarket chains. As a result, residents of these neighborhoods are doomed to shopping at their local bodegas and mom-and-pop stores. While the image of a bodega and mom-and-pop store can often be quite quaint and conjure up an image of a hard-working family operating a store with pride, the truth is often that many of these bodegas are ripping off their customers by selling overpriced and outdated products in stores that are filthy and unsanitary. It is no wonder that recent polls of New York consumers showed overwhelming support for Wal-Mart. Perhaps injecting a little real competition into the system would be a wake-up call and cause the grocery stores and bodegas that are not properly serving their communities to close and be replaced by better quality merchants.
Community
For those of you who regularly follow my blog you've undoubtedly noticed that I often focus on articles and discussions about creating communities in an urban environment. Here's another article that I found intriguing about the use of good urban design and architecture to transform a sterile urban college campus into a true college community.
Blatant Self-Promotion (A Word From Your Sponsor)
I recently wrote an article entitled "Turnaround tale-A Building Management Case Study" which outlines the steps that Sierra took to turn around an office building that we took over management of last year.
Dodging a Bullet?
Many in our industry feel that we may have dodged a bullet with the recent modifications to the rent laws because the changes could have been far worse. However, before we all breathe a collective sigh of relief, we must bear in mind that the Governor has stated quite emphatically that he supports strengthening the rent laws and that much can still be done by way of administrative changes through the DHCR. Don't be surprised if we start seeing rulings that are unfavorable to property owners. Also, while these laws have been extended for four years, our "victory" may be very short-lived. The fact of the matter is that as soon as there is a democratic majority in the senate, we can expect that the laws will be revisited and substantial modifications will be made. Elections are only 15 months away.
Patriotism
Regardless of your politics, patriotism should never go out of style. We are blessed to live in this country and enjoy the freedom and opportunities that it gives us. I particularly enjoyed the recent article "100 Great Things about America". I'm sure that each of us could come up with our own list as well.

Articles 05.31.11

2011-06-01T15:41:00.001-04:00

The Paradox of the Modern City

The central paradox of the modern city is that as the cost of connecting over long distances has fallen proximity has become even more valuable. What will now happen as the cost of connecting over long distances starts to increase as energy and transportation costs continue their upward trend? My guess: central business districts will become even more valuable as places for businesses to operate. Stay tuned.
More on the Value of Proximity
A recent article in the Wall Street Journal highlights how artists and musicians working in close proximity with each other helps facilitate the flowing of the creative juices. Incubator space is an important facilitator for small businesses. This can work not just for artists and musicians but also for any industry or business that depends upon the exchange of information and ideas and on the sharing of physical resources such as artist studios, research facilities, medical uses, light manufacturing, food preparation etc. For incubator space to succeed it's necessary to create a critical mass of related and synergistic uses and to provide an infrastructure and an atmosphere that encourages cross-pollination and the sharing of ideas. Converting obsolete industrial and commercial space into business incubators is a terrific use of these assats and a great way to promote job growth.
Local Idiosyncrasies
It’s amazing how virtually any place you visit has its local idiosyncrasies many of which flow from the stupidity of local politicians. I recently spotted a sign in a Tucson taxicab that specified not just the rates but also the designation "35 psi". I thought that a little odd. Apparently, a local Ordinance requires cab drivers to post the required tire pressure for their vehicles so that passengers can check to make sure that the tires aren't underinflated. Under inflation results in the meter charging too much. I didn't ask, but I was wondering if every cab driver was also required to carry a tire pressure gauge to allow a passenger to actually to check the tire pressure.
How Many “In Boxes” Do You Have?
Think about it. Add them all up. You probably have far more than you think. Include all your various phone mail accounts (don't forget your home phone-you probably forget to check that all the time), various e-mail accounts, BBM’s, instant messaging, Facebook, linked in, Four Square, any other social media, texting, tweeting (or, as I call it, "twitting"). Oh, and let's not forget the old school way of communicating, regular mail (although, for the life of me, I can't remember the last time I actually received anything that was hand written, not even a parking ticket), Federal Express, faxing (yes, it still exists). Is it any wonder that despite all the various advances that have been made in the area of communication it is getting even more difficult for us to communicate with each other?
Only on the Upper East Side
No joke, I actually spotted a sign posted in a garage on the Upper East Side of Manhattan advertising bicycle parking for "$137 per month". I guess if you own a $15,000 bicycle, you wouldn't hesitate to pay $137 per month to park it. Although, if I spent that type of money on a bicycle I would display it in my living room as a piece of artwork.
iPod syndrome
I use this term to describe how the electronic media has affected our attention spans. It used to be that you would buy a record (you know, that 12 inch vinyl disc that you play on a turntable) and listen to an entire side before either flipping it over or putting on another record. Now, on your IPod you're lucky if you even listen to an entire song before skipping to the next.
Electronic readers are now doing to books what the IPod has done to recorded music. I am a voracious reader and would typically read one or two books at the same time. Now that electronic readers has made carrying an entire library of books with you at all times, I now read 8 to 10 books at the same time and rarely finish any.
Listening to the radio in my car has also evolved in much the same fashion over time. Worse, now with XM radio, I constantly skip from station to station to find a song that I like. And even if I find a song that I like I'm still seeing if there's another song playing that I like even better.
Five Minute Management Course
Rather than spending two years your life in graduate school and over $100,000 in tuition, read this amusing article. It will teach you everything you need to know to succeed in business.
A Picture is Worth a Thousand Words
While this Wall Street Journal article ("Long Arm of the Law") about "noodlers" is pretty funny you need to take a look at the photograph to truly understand the stupidity of this activity. I guess they figured that sticking their legs into the mouth of a catfish was too hazardous and that using their arms was a better idea.

Articles 04.07.11

2011-04-04T15:53:00.008-04:00

Why New York City Still Rocks!

Great article about why New York is such a unique place. For those of you who are diehard urbanites I also suggest the recently published book "Triumph of the City" by Nathan Glaeser, a Harvard economist. A quick and thought provoking read about the advantages of city living and how public policy has failed our cities over the past five decades.

Tips for Saving Time

Probably the best tip is to stop reading blogs! However, this article has some good ideas. I recently started using the web tool "Dropbox” as a way of being able access my files from any computer and to share them with others.

Quick Solution to New York City's Rat Infestation Problem

3 words.

“Neutered feral ferrets.”

If the city were to release these vicious little rat killers into the subway system the city's rat problem could be solved in less than a year. Not exactly the most politically correct solution but certainly effective!

Public Buildings, "Super Development Rights" and an Affordable Housing Solution

Creating affordable housing in New York has been an serious issue since the Dutch settlers first discovered Manhattan (good opening sentence but a bit of an exaggeration). Some of significant obstacles to the creation of affordable housing include high acquisition and construction costs, high real estate taxes and a limited supply of appropriate sites. Many programs have been devised to attempt to address these concerns but the problem still exists. A proposed solution: There exist a large inventory of excess development rights associated with city and state own properties throughout the city. To allow each governmental entity to realize the maximum benefit from these excess development rights and to also encourage the creation of affordable housing, the zoning resolution should be modified to create a "super development right" that would permit these excess development rights to be transferable to any property within a certain radius of the subject site so long as they are used for the construction of affordable housing. This would help average down the acquisition costs associated with the creation of affordable housing, increased significantly the number of potential sites and, if coupled with real estate tax abatements etc. would help reduce the operating costs of the buildings.

In addition, if developers were allowed to vacate older tenement style buildings and replace them with larger buildings (by either using the "super development rights" described above or other available techniques to increase density) containing an equal or number of affordable units this would increase significantly the number of sites available for affordable housing. For example, a developer should be permitted to demolish a 20 unit walk-up tenement style building and, by utilizing a combination of the excess development rights associated with that building and the acquisition of additional "super development rights,"to construct a 100 unit property containing 20 affordable units and 80 market rate units.

In order to accomplish this, the developer would have to be allowed to relocate the rent regulated tenants within these buildings. Not only would this result in the replacement of old decrepit housing stock with new, it would significantly increase increased the city's tax base. In addition, it would also generate additional revenues to the city or

the state from the purchase of the "super development rights" by the developer.

Means Testing and Rent Regulations

Perhaps one of the most perplexing questions about the current system of rent regulations is why there is no system of means testing to ensure that those who are receiving the benefits of the rent laws are actually those in need of affordable housing. The argument always made in support of rent regulations is that it is needed to preserve affordable housing. However, without a means test the system does not guarantee that regulated housing necessarily goes to those in need. In fact, it is truly ironic that many of our elected officials (US Congressman Charlie Rangel, City Council President Christine Quinn, former Governor Patterson, to name just a few) occupy rent regulated apartments while trumpeting the need to maintain the rent laws to preserve affordable housing for the needy.

To eliminate the hypocrisy in the system and to create a fund for the creation of additional affordable housing a means test should be established for rent regulated housing . For those current tenants whose income exceeds the threshold, the landlord would be permitted to not renew their lease, deregulate the apartment and then charge a market rent provided that the landlord makes a contribution to a city fund that would be utilize to the finance the creation of affordable housing. The amount of the

contribution would be a formula based upon the amount by which the landlord was able to increase its rent upon the vacancy.

Are you

Closet Republican?

I think this billboard on the West Side Hwy. says it all.

The Madness of City Real Estate Taxes

Surprise! Even as the net operating income of City properties declined over the past several years, our tax assessments have increased, in some cases quite significantly (see the article "The Madness of City Property Taxes"). Of course , on the face of it, this makes no sense but a careful analysis of the system of calculating real estate taxes makes it clear that tax assessments are a significantly lagging indicator. The reason, the determination of real estate taxes are based upon income and expense statements owners have to file about their properties. The information on these forms are from a previous year and are the basis of the calculation of tax assessments for the current year. The result is that tax assessments lag the market. This works the disadvantage of property owners in a bad market but to their advantage in an improving market as tax assessments decline even as the income of the building is going up.

The World Loves New York

In a world that seems to be going mad, New York is viewed as an island of stability (maybe it's because of all the schist on which our buildings are built!) The most recent example of this is the purchase of the former NBA store at 666 Fifth Avenue by a Spanish retailer for over $8000 a foot. Foreign money is fueling a resurgence of the real estate investment market in our city. The foreigners (who often have a much better world view than us) appreciate the political and economic stability that New York City offers relative to the rest of the world.

Negotiating 101

For some useful negotiating tips take a look at the article "Five things you should never say while negotiating." Strangely, "I love you" isn't included.

Web Site

As part of Sierra's rebranding of an office building that we took over last year, we created a website that has generated a tremendous amount of interest in the property. Last year the property suffered with a vacancy rate in excess of 30%. Today, the building is 98 % leased in no small part due to the rebranding of the building. Take a look at the website at http://www.bleeckerandbond.com/.

Articles 03.22.11

2011-03-22T12:10:00.002-04:00

Two interesting articles --

"Sierra Realty Putting West Side Studios on the Map with Spate of New Deals," from Real Estate Weekly
and the story of candy concern Swissmaker and our own Brad Schwarz ink deal in "Twisting Times Square Lease," from The Commercial Observer

Enjoy!

Be A Charismatic Speaker

2011-03-18T16:07:00.003-04:00

Josh Gordesky at the smart writing and speaking tips blog, I Hate Long Emails, has a smart fun interview with me here. Go read it, and check out other great content. We added Josh to our blogroll for future convenience.

Articles 02.18.11

2011-02-18T15:48:00.008-05:00

The Taxi Cab as Economic Indicator

I have some pretty unscientific economic indicators that I watch to judge the state of our local economy. These would include the ability to get a cab in midtown Manhattan on a rainy day during rush-hour, whether my doorman gives me stock tips in the morning or how crowded the public tennis courts are in Central Park (the more crowded, the lousier the economy -- people give up their country club memberships). The article “Can You Hack it?” discusses what the history of the New York City taxi drivers says about the US economy.

Snow Removal: how the city can do it for free!

Shoveling snow is great aerobic exercise. The next time there is a major snowstorm, the city should require local health clubs to offer the hottest new exercise class -- the snow shovel aerobic workout!

Persistent Unemployment

Despite a pickup in the economy, unemployment continues to be a stubborn problem. I've always felt that unemployment issues are not just a function of the direct cost of hiring but also the myriad of rules and regulations with which employers must contend including fair labor laws, minimum wage requirements, OSHA requirements, etc., etc., etc., all of which add significantly to the cost of employment.My idea: during a severe economic downturn permit companies to hire unemployed workers and exempt the companies from complying with many of these rules and regulations with respect to these employees for a specified number of years. This would encourage employment by removing many of the obstacles and barriers that discourage employers from hiring.

The Silver Lining

Serious structural reform usually only occurs during periods of crisis. Only then are people compelled by economic necessity to resolve serious problems. The Great Depression gave birth to the New Deal, New York's flirtation with bankruptcy in 1977 resulted in significant labor concessions from local unions. Now with New York State and the city confronting the worst economic downturn in a generation there is a terrific opportunity to fix many of the structural problems that have plagued the city and state for many years. Pension reform, ethics reform, budgetary and fiscal policy, last in/last out firing policies etc. are all issues that have now been brought to the forefront and have a reasonable chance of resolution. Andrew Cuomo (much to my pleasant surprise) appears to be very much aware of the opportunity he has to effectuate this change. Hopefully he will have the willpower and strength to continue the fight until these changes are brought about. To see how other governors are taking advantage of the current economic downturn to effectuate serious structural reform, take a look at this New York Times article.

Efficiency

There is hardly a hard-fought political campaign that doesn't go by without one or more major candidates pledging to make government function more efficiently by eliminating government waste and needless spending. Yet, once the smoke clears and the election results are determined, these campaign promises often become empty pledges. What I find particularly alarming is that in all the discussions we are now hearing about budget deficits, nobody has really talked about how to make government function more efficiently as a way of reducing our deficits. They either discuss layoffs and service reduction or increasing taxes. It is time for politicians to act less like the politicians that they are and to behave more like the seasoned managers we need and take a hard look at how government functions and figure out how to eliminate much of the waste. The recent experiences of our airlines and auto companies are good examples of two industries that, through disciplined belt-tightening, have been able to rise from the dead. Our governments need to take a chapter from their books and weed out the gross inefficiencies in our systems.

The Greatest Year Ever

So what was the greatest year in the history of the city? For me, it was 1976. Even though the city was in the depths of a terrible downturn, a new creative spirit was beginning to take hold in Soho and the Village. I was living down on the fifth floor of a walk up on Sullivan Street in SoHo at the time. I was working as a bus boy in a trendy SoHo restaurant. In my free time I visited the new art galleries that were opening up in the area, listening to the new punk bands that were premiering at Max's Kansas City and CBGB’s, and hanging out in Washington Square Park and watching the world unfold around me while drinking Miller Hi-life out of a brown paper bag. I didn't have a care in the world. For other takes on the greatest year ever take a look at the article "The Greatest New York Ever."

All You Little Piggies!

Feeling hungry? Check out "Where to Eat."

Articles 01.04.11

2011-01-04T12:44:00.015-05:00

Distressed Debt Trap -- Buyer Beware

In the event of the purchase of a mortgage at a discount, the buyer will recognize capital gain if they acquire title to the property by biddingon the full face value of the mortgage at the foreclosure auction. In such an event the amount of the gain will be the difference between the fair market value of the property less the amount the purchaser paid for the mortgage. The reason for this is that the winning bid at the auction will be deemed to be the fair market value of the property. For example: if an investor purchases a $5 million mortgage for $3 million and then wins the property at the foreclosure auction based upon a $5 million bid, the investor will have realized a taxable gain of $2 million.

How to avoid this pitfall: first, do not go to an auction but try to work out a settlement with the fee owner and any junior lien holders that does not require a foreclosure auction. Second, obtain an appraisal of the property that establishes its fair market value as price paid for the note.

Useful New York City Facts

The next time you're walking down the street and are stuck behind three rotund slow moving tourists from Indiana keep the following facts in mind:

in 2009 there were over 45 million visitors in New York City and that they contributed over $28.2 billion to our economy. As far as I'm concerned, let them continue clogging our streets as long as they continue spending their money here.

Read all these facts here.

Other interesting facts:

Eating establishments: 18,951
New restaurants in 2010: 157
Average cost of a dinner in 2010: $41.81
NYC is #1 US tourist destination for 1st time since 1990. NYC experienced a drop in tourism last year, but Las Vegas and Orlando were hit harder, allowing NYC to rise to the top.

Historic New York

for those of you who enjoy looking at pictures of historic New York the Museum of the City of New York has launched a portal into their collection of over 50,000 photographs of New York City from such notable photographers as Berenice Abbott, Samuel H. Gottscho, and Jacob A. Riis to name just a few. Check it out here.

My Cousin Vinny

I like to take naps. Every afternoon in my office. For about 20 minutes. I have a couch, small neck pillow, eye pillow and a white noise machine.

What you see here is the dial that allows me to select various modes on the white noise machine. Most of these modes, such as ocean, waterfall, and rain, are pretty standard on most white noise machines. This particular machine is unique, however, in its inclusion of my favorite mode-the "city" mode. This mode broadcasts the soothing sounds of city traffic, the steady hum of car engines, the melodic honking of horns and the three-part harmony of ambulance, fire truck and police car sirens.

I have to believe that whoever designed this white noise machine had to have been a fan of the movie "My Cousin Vinny" where the main character, played by Joe Pesci, had traveled from Brooklyn neighborhood to a quaint Southern town only to find that he could only get a good night sleep in the excruciatingly noisy local penitentiary.

You' re Ugly!

See if you can describe the mistakes in these two pictures of a recently completed luxury condominium on the southeast corner of 87th and Park Avenue. Give up?

First, this has to be one of the ugliest buildings ever built on Park Avenue. It is a glass wrapped middle finger to the entire neighborhood. It has absolutely no relationship to the building adjacent to it or to any of the other buildings along Park Avenue. Perhaps this could be forgiven if the architecture was truly remarkable or innovative but it's not.

It's no wonder that not a single unit in this development has been sold over the past year. Unfortunately for those of us who must live with this eyesore we can't just simply erase this building from the landscape but must live with it for the rest of our lives. Trevor Davis, the developer, should be ashamed of himself.

Second, as you can see in the lower left-hand corner of the window this building qualified for a 421-a tax abatement. So not only is this building ugly, it was constructed with a tax subsidy from the city. It's hard to imagine the necessity of granting a tax abatement for the construction of a building in one of the richest neighborhoods in the city. So, adding insult to injury, not only is this building incredibly ugly, we, as New York City taxpayers, subsidized its construction.

When Old becomes New

These are pictures of the newly constructed Ralph Lauren building on the southwest corner of 72nd St. and Madison Avenue.

Never has classical architecture looked so fresh and new. In a city that has grown accustomed to modern and contemporary architecture designed by such superstars as Frank Gehry, Renzo Piano, Jean Nouvel and others it is refreshing to see a return to classicism that has been so beautifully executed.

Sierra in the News

2010-12-14T13:57:00.010-05:00

Journalist Jotham Sederstrom has a wonderful interview with our own Peter Braus in The Commercial Observer about ideas for Pier 57.

The good folks at City Biz report that Demetri Ganiaris has joined Sierra Realty as senior vice president of acquisition and development. Ganiaris has more than 15 years of experience inNew York City real estate and economic development. Prior to joining Sierra Realty, Ganiaris was a founding member and managing principal of Alder Real Estate Partners, a real estate advisory and brokerage firm that provided asset management and strategic planning services for such clients as Brevet Capital, Aris Real Estate Partners and EEK Architects. He previously worked at Vornado Realty Trust and the New York City Economic Development Corporation in the areas of program management, leasing, construction, contract management and real estate transactions. We are so pleased to have him aboard.

And again, Jotham Sederstrom writes in The Commercial Observer about Garry Steinberg moving from a highly successful career in retail to brokering space for the same with us at Sierra Realty. Awesome photo!

The Real Deal reports that our new building, former Swig FiDi, a seven-story, roughly 40,000-square-foot vacant commercial building at 140 William Street, is seeking tenants for the first time since it changed hands, after sitting vacant for several years. The tenant could be, well, anybody! The building could easily accommodate residential or commercial occupants, or even a hotel.

Articles 11.29.10

2010-11-29T14:27:00.015-05:00

Current property valuations: I am constantly being asked whether property valuations are decreasing because of increases in capitalization rates. While capitalization rates have increased over the last two years what is more significant is the way in which properties are currently being underwritten. During the boom years, most underwriting utilized assumptions of projected large increases in rents often projecting increases of double digits each year. A clear sign of a market that was out of control. Currently, underwriting has come down to earth with more realistic rent projections. Consequently, property values have been more affected by the change in underwriting standards than by any change in capitalization rates.

Proposed Change in Lease Balance Sheet treatment: for those of you (hopefully, this is all of you) who don't regularly read the International Accounting Standards report you should be aware of a proposed accounting change that could significantly affect how companies view long-term leases. Could these changes encourage more companies to purchase office condominium units? Take a look at the article “Tenants, Landlords Could Face Dramatic Changes.”

High-tech Gizmo of the Month: observed in Boston, a trash can that compacts garbage using solar energy. The benefits: greater capacity for the garbage bin and easier and tidier collections.

Take a tour of the new East River Waterfront: having recently completed a tour circumnavigating Manhattan, I was struck by the huge number of new public parks that have open all around the perimeter of the island. One of the last missing pieces in this puzzle is the East River Waterfront, which, once this park opens, will be completed.

A country built on debt cannot stand: Abraham Lincoln once famously stated that a “House divided against itself cannot stand.” If he were alive today he might modify his speech and announce, “a country built on debt cannot stand.” More and more the American economy has become dependent upon consumer spending that is fueled by debt (either expensive credit card debt or, even worse, debt secured by second and third mortgages on a primary residence). No surprise then that during an economic contraction our economy goes into a deep swoon with high levels of bankruptcy and foreclosures. While less debt will result in less vigorous economic growth it will also result in fewer and less drastic economic downturns. Why then do we continue to bemoan the fact that the US consumer is spending less and saving more? Ultimately, this will lead to slower growth but more economic stability. Read “Consumer debt tumbles $100 billion.”

Do you think they paid overtime? Check out “Chinese workers build 15 story hotel in just six days.” You may want to think twice before checking into this resort.

For some interesting statistics about the third quarter multi-family sales market take a peek at the article “About that Third Quarter.”

Sierra in the News

2010-11-15T07:51:00.005-05:00

Journalist Adrianne Pasquarelli in Crain's New York business reports that h igh-end Italian menswear retailer Tincati is making its U.S. debut in the Big Apple. The Milan based company recently signed a 14-year lease at 20 E. 63rd St., between Fifth and Madison avenues. The lease includes all 6,000 square feet of retail space in the five-story townhouse, nearly 1,100 square feet of which are on the ground floor. Asking rent, including taxes, was $800,000 a year. That price translates to a blended rent of $133 per square foot for the building.

The good folks at Real Estate Weekly have a story on our recent hire of Garry Steinberg, a licensed broker and seasoned commercial real estate specialist with more than three decades of experience in the fashion industry, as managing director. Steinberg will focus on the fashion, cosmetics, home and accessories industries.

Our friends at the always excellent Mann Report have a wonderful piece on how we brought Sprinkles, Hollywood's favorite cupcake bakery, to New York City.

The Mann Report also has a nice story up about Brooke Lovell, our new vice president of communications and marketing. Brooke will focus on our long-term marketing strategy, corporate communications, and managing client marketing campaigns.

Again from the Mann Report, a wonderful, perceptive piece on our own Peter Braus:

Over the years, [Braus] has represented such landlords as the Battery Park City Authority, C&K Properties, Goldman Sachs and the ownership of Brown Harris Stevens. Braus represents M&T Bank in New York City and has secured numerous locations for the bank, including their flagship location at 11 West 42nd Street. Recent transactions include the new Francois Payard Bakery at 116 West Houston Street and Sarabethʼs Tribeca location at 339 Greenwich Street. He has also been responsible for dozens more lease transactions in Nolita, Soho, and Tribeca for brands like Ed Hardy and Sigerson Morrison.

Articles 10.19.10

2010-10-19T16:17:00.017-04:00

Food Glorious Food!
As a partial result of the economic downturn, street food has evolved significantly over the past two years. Affordable, good quality food and low operating expenses have become top priorities on the NYC lunch scene, and entrepreneurs have discovered that the food truck is far more cost-efficient than opening a restaurant. The trend is growing and the wide variety of foods being offered by these trucks is only exceeded by the various walks of life from which the entrepreneurs come.
Food trucks have now become such a part of our epicurean pop-culture that they even have their own annual awards -- the "Vendy’s." For a quick, cheap curbside meal, visit one of these trucks.

For those food snobs among you who wouldn't be caught dead eating a bison burger at a curbside food truck check out the article "Best of NYC Dining: 10 Most Exciting Restaurants."

And for the latest trends in restaurant design take a look at the article "Great-good-places."

Now that you've gorged yourself on a cholesterol-rich lunch from the trucks then hit one of Manhattan's most exciting restaurants for dinner, you should read the article "Fourth Stroke Indicator." Early detection can be an absolute lifesaver.

Innovations in Parking

An idea whose
time has arrived! Bicycle parking, one dollar a day, $20 a month. No more biking around with a 25 pound chain and lock wrapped around your waist.

For truly cutting edge parking technology take a look at the presentation for the "Multi-Parker 730."

Road Trip!
Next time you're itching to put the pedal to the metal and feel the wind of the road ripping through your golden locks, take look at the article "27 Ultimate Road Trips" first for some interesting rides.

Articles 8.31.10

2010-08-30T09:09:00.012-04:00

Local Manufacturing Jobs: stick a fork in it, it's done?

Contrary to popular belief manufacturing as an industry is not dead in New York. In fact, as the article "Made in Brooklyn" illustrates certain types of manufacturing jobs are thriving in New York.

Grab your Nuts and Have Sex 700 times a year: The Best Health Advice I've ever received.
Need I say more? Check out "What Works."

New York Uncovered
One of the great things about living in New York City is that it's very difficult to get bored. The city is dynamic, multicultural, and amazingly diverse. I've lived here over 50 years and can always find something new to explore. Two recommendations: Chicago has its famed architectural tour conducted from a tour boat on the river. Now New York has a similar tour. If you're a building nut like my wife and me, I heartily recommend this tour. For more information look at the article "A Singular Perspective on the Urban Mosaic."

For something more pastoral, take a trip to Governors Island. Viewing it from a distance does not do it justice. It needs to be experienced to be truly appreciated. Besides being architecturally interesting and offering great views of the city where many cultural programs that are going on there that should be experienced. Go by yourself or bring the kids. The article "Governors Island as Playground" is aptly named.

How to Seduce a Community
Given the experience of Wal-Mart in unsuccessfully attempting to open its first store in New York City over the past decade it is somewhat surprising to find other big-box retailers who have succeeded where the country's biggest retailer has failed. For a primer on how to accomplish this difficult task take a look at the article "A Decade of Wooing."

How to Push a New Yorker's Buttons
We all have our pet peeves. The article "What drives New Yorkers up a wall" describes New Yorker's top annoyances. Don't expect too many surprises.

Jingle Mail

Those of you who are regular readers of my blog know my fascination with various terms that crop up from time to time that indicate what is going on in the marketplace. The newest entry "jingle mail" refers to a property owner mailing the keys to a property back to their lender. Definitely a sign of the times!

And the winner is!
(And, no it's not "Stairway to Heaven." So what is Rolling Stone's top rock 'n roll song of all time? Take a look.

News and Views, August 13

2010-08-13T08:34:00.008-04:00

Stats and the City

For some curious statistics about the City check out this article.

What I found particularly interesting is that while $2 today buys you what $1 got you in 1985 (a 100% inflation rate over 25 years), average apartment prices for a one bedroom co-op/condo in Manhattan have increased 185% (significantly higher than the inflation rate), the average asking rent for commercial space has increased 76% (significantly less than the inflation rate), and the average 30-year fixed rate for New York area co-op mortgages has decreased from 13.28% in 1985 to 5.13% in 2010 (which probably explains why the appreciation in co-op/condo prices has greatly outpaced inflation during this period).

Also interesting is that while the city's population increased by 1.2 million people over the 25-year period, the number of people employed only increased by 200,000 during that time. Yet the unemployment rates were 8.2% in 1985 and 9.4% in 2010. Given the large increase in population relative to the modest increase in number of people employed over the same period together with slightly disparate unemployment figures it's difficult to explain this phenomenon.

My guess is that the number of children and elderly in the city relative to those in the workforce has increased significantly during this time period.

Operating Figures for Rent Regulated Housing

The "Highlights from the first three RGB Reports" provide some very interesting statistics relating to rent regulated housing in New York. The statistics are based on 2008 data and show that the average monthly rent for all rent stabilized units was $1,012 per unit ranging from a high of $1,404 in Manhattan to $743 in the Bronx. Operating and maintenance costs averaged approximate $739 per building.

The most startling number to me, however, was the number of properties that are characterized as "distressed" (buildings that have operating and maintenance costs greater than gross income). At 12.8% (or one in every eight buildings) this is an extremely upsetting number, particularly given that this was data collected based upon 2008 results which, for the most part occurred before the economic downturn fully affected New York.

I would expect that for 2009 and 2010 this statistic will be even worse. Under no set of circumstances is it healthy for 1/8 of the rent regulated housing stock to be in distress. This is bad for landlords, the tenants who have to live in substandard conditions as a result, and the city and the state that stand to lose significant tax revenues as a result and who ultimately may become the landlord of last resort.

Alive and Well!

It's expected that the 2010 census will demonstrate the resilience and strength of our city. New York is the only large city in the Northeast and Midwest, including Philadelphia and Chicago, that has shown substantial population gains since 2000. In fact, New York City has been adding, on average, almost 1000 people a week since 2000. What's even more interesting is the characteristics of these people and what it tells us about how the city has changed during the past decade and what we can expect going forward. For more information check out Crain’s white paper on "what the 2010 census..."

Three Years of Law School and This is What We Get

A recent newspaper article headlined " Alton attorney accidentally sues himself". Can't say that I'm surprised.

Great Idea of the Week

One political candidate’s answer to the proliferation of governmental rules and regulations: Office of the Repealer. He's got my vote.

25 Big Ideas to Change New York

Definitely worth a quick read.

No, It's Not "Stairway to Heaven" (volume 1)

Rolling Stone magazine just published their list of the 500 greatest songs of all time. I've included their list of the second through 10th. Number one will be included in my next blog posting.

Sierra in the News

2010-07-29T12:16:00.011-04:00

Some interesting news this week:

The New York Real Estate Journal notes that Sierra's own Jeffrey Anderson has leased 1,100 s/f to Musmanno of The Musmanno Group at 229 East 60th Street.

Attention cupcake lovers! The Real Deal reports that Sierra helped our fave bakery, Sprinkles Cupcakes to lease 780 Lexington Avenue, across the street from Bloomie's.

Real Estate Weekly's On the Scene writes about Sierra's Barry Sanet as the exclusive agent for Renaissance Studios at 130 West 57th Street -- exciting mixed use with some very glamorous retailers --

and finally,

The Commercial Observer notes that yours truly (James Wacht) is Appleseed Advisory Council Chair -- check out their wonderful NYC advocacy and social justice work here

News and views, July 6

2010-07-06T12:01:00.010-04:00

Distressed Assets and Foreclosures

Since everybody seems to want to get into the distressed asset business, I thought it would be useful to include an excellent e-cast on the subject. (My thanks to the Berdon LLC firm for allowing me to publish this.)

The Death of the American City

My wife and youngest son have a quest to visit every major league baseball stadium in America. This quest has taken us to many of our country's cities. Being a native New Yorker, I typically envision cities as being centers of bustling activity and commerce. My visits to other cities in the country have shown me that often my vision could not be further from the truth. Many downtowns become virtual ghost towns in the evenings and on weekends. It is very strange to wander these downtowns on a beautiful weekend day and rarely see another person. What is the cause of this phenomenon?

One culprit is the automobile and the creation of the Interstate Highway system in 1956. At the time of its creation, the Interstate Highway System was thought to be critical to our national defense by enabling troops and military supplies to move freely and quickly around the country in case of an emergency or foreign invasion (while that may sound silly today, let's not forget that this was during the height of the Cold War). In response, governments constructed elaborate highway networks in and around their cities' downtowns which, rather than facilitating the movement of troops and supplies, encouraged the flight of the middle and upper class to the ever widening bands of suburbs being developed in the surrounding areas.

Cities began to lose their lifeblood as a result of automobile culture, and as they did, tax bases eroded, services were cut and taxes increased- accelerating and perpetuating an upper and middle class exodus. As we become more attuned to the destructive effects of automobile-created sprawl on communities, culture and natural resources, we must invest in our mass transit infrastructure to reverse it, cultivating an urban density characterized by shared resources and integrated communities. A beginning of this reversal trend can be traced to the artists and urban pioneers who have adopted many cities' deserted and deteriorating neighborhoods, often out of necessity, revitalizing some of the most desolate, underused urban territories that have now become vibrant and valuable parts of the cities' fabric.

A Radical Proposal to Remake Government

I, like many of you, pay a lot in taxes. It seems that our elected representatives look at us as ATM machines available 24 hours a day/7 days a week to pay for their pet programs. It's not that I necessarily disagree with the purposes of their programs but rather more a belief that governmental agencies are so grossly mismanaged that much of our tax dollars are wasted. For me, it is not necessarily that I would like to keep more money for myself, after all even after I pay my taxes every year I still contribute significant amounts to various charitable organizations. It's that every time I read a story about non-competitive bidding for multi-billion-dollar defense contracts, $200,000 annual pension payments to government workers and the like, I cringe. So the question is: what can we do to incentivize our government to spend our tax dollars as frugally and wisely as we would if we were spending it ourselves? Privatization is a partial answer but not always satisfactory when it comes to providing quasi governmental services that serve the public good but do not generate a profit. My suggestion: allow taxpayers to take a dollar for dollar credit against their taxes (as opposed to the current deduction that the tax code allows) for any contributions they make not for profit organizations that provide quasi-governmental services. Not only would this force government to be more competitive and pay more attention to the bottom line, it would also give taxpayers substantially more control over how their tax dollars are being spent which may actually encourage even more giving than would otherwise be collected through taxation. Obviously, there are numerous issues that would have to be addressed in creating such a system but encouraging competition with government would go a long way to compel a government to function more effectively and efficiently.

Interesting Fact: Persistence Pays Off

Other than the presidency, Abraham Lincoln lost every election in which he ran.

Pigeon Poop: Some Interesting Facts about these Ubiquitous Birds or "Always Look-up as you walk"

Number of pigeons in greater New York City area: 7 million
Number of pigeons served in both world wars, as messengers: 1 million
Pounds of pigeon poop produced yearly per pigeon: 25 (do the math-that's a total of 175,000,000 pounds of pigeon shit produced every year in New York City. I shudder to think where it all goes!)
Miles per hour on pigeon can fly: 60 (the fastest animal in the world, the cheetah, can run up to 70 mph)

The Smarter Planet

For the first time in history more than one half of the world's population lives in cities. By 2050, that number could rise to 70%. IBM has created a really cool website showing their perspective of the future of cities and the earth. If you thought Fritz Lang's movie "Metropolis" was really cool you should definitely check out this website.

Recommended Websites

Occasionally, I come across websites that are particularly useful:

Cheap parking: For cheaper parking rates and discount certificates check out www.bestparking.com.

Great productivity tool: this website allows you to dictate memos etc. into your cell phone and have them transcribed and e-mailed back to you as text. Accuracy is pretty good.

A Personal Story

If you have a child who is struggling with a learning disability, this article recounts our family's experience struggling with -- and ultimately conquering -- our oldest son's learning disability.
Our son is now 19 years old and is a very successful student at University of Vermont. This article reminds me of the difficulties we experienced in dealing with his learning disability but also the tremendous gratification we felt on his success. I couldn't be prouder of my son for his accomplishments.

This Week's News Roundup

2010-06-30T17:08:00.008-04:00

The Mann Report has a fun story about how we at Sierra tackled the impossible -- Peter Braus brought his years of restaurant leasing experience to bear -- and Murray Hill foodies prevailed!

CityBiz Real Estate reports on Sierra Development LLC, launching a new division headed by 30-year construction executive Gary Zaid, expanding our service lines to include construction and project management and owner and tenant representation. Real Estate Weekly has a nice report on our new division launch here also.

Socialnews.biz has a nice intro piece on Gary Zaid joining Sierra Realty as SVP.

And, finally, The Real Deal has a story on our commercial properties recently placed on the market -- check out the beautiful Hotel East Houston near Eldridge and Allen, on sale for $25 million.

This Week's News Roundup

2010-06-16T17:20:00.007-04:00

Click on any of the following links to read the stories -- this week's interesting real estate business news:

NYC Architecture: better rents, new projects, and the Vornado effect bring new eateries to Midtown South.

Real Estate Board of New York's Retail Deal of the Year Awards -- fun photos here!

Crain's New York Business notes that restaurateur Ed Martinson signed a 20-year, 5,000-square-foot lease at 45 E. 30th St. Peter Braus and Peter Levitan of Sierra Realty Corp. represented both the tenant and landlord, 43 Park Owners Group. Mr. Martinson's new restaurant is scheduled to open this summer.

REBNYʼs annual Retail Deal of the Year awards highlighted the Best of 2009. Above, Ripco Real Estateʼs Peter Ripka (joined by Sierra Realtyʼs Peter Braus) holds his award for the deal that “Most Significantly Benefits Manhattan” -- the leasing journey of the 475k SF East River Plaza, which turned a dilapidated manufacturing plant into a retail destination.

M. Marianne Thorsen and An-Chi Miau of Sierra Realty are handling Hotel East Houston at 151 East Houston, between Eldridge and Allen streets, on the market for $25 million. The newly constructed hotel, comprising 15,395 square feet and six stories, has 42 rooms with custom-made furniture, wood finishes and marble bathrooms. In addition, the hotel has a banquet facility, nearby parking and a rooftop terrace and lounge that overlook the Hudson River.

Sierra Realty Corp. launched Sierra Development, its new construction and development division, which will be led by Gary Zaid. This expands the companyʼs service lines to include construction and project management, owner and tenant representation, general contracting, value engineering, and development services.

All that Jazz -- Paying Off for At-Risk Students

2010-06-02T11:24:00.003-04:00

Arturo O'Farrill, Grammy-winning pianist, composer, and educator and I are introducing the first Afro Latin Jazz Alliance-sponsored Music in School program at the UA Bronx Studio School for Writers and Artists. Read here for the whole story, and check out Arturo's Afro Latin Jazz Alliance website here.

Computers are bad for you (unless you are a lawyer billing by the hour)

2010-06-01T12:40:00.005-04:00

As I sit here reading the fifth draft of an 80 page lease, I can’t help but to think that if it had not been for the advent of the computer I could probably be doing something far more productive with my time.

Back in the big hair day of the early 80s when I was a practicing attorney and before the widespread use of computers and word processing software, it was rare that a lease would exceed 20 pages or go through multiple drafts before being finalized. Ironically, the advent of computers did not necessarily make the practice of law any more productive but instead encouraged the creation of excruciatingly long and complex documents that can be negotiated ad infinitum until either the lawyers tire of the game or the client finally screams "uncle."

Back in the good old days of low technology typewriters, onion skin paper, "white out," and correction tape making wholesale changes to a document was very difficult and time-consuming. Consequently documents were kept simple and were not over-negotiated. Have we really accomplished anything today by preparing complicating leases and having long protracted negotiations? Other than the exorbitant legal fees that often accompany these documents, probably not!

Mortgage Recording Tax Savings

2010-05-28T15:39:00.004-04:00

Did you know that any taxpayer who has paid mortgage recording tax is entitled to a one quarter of a point refund of the amount paid? On a $5 million loan, this would be a $12,500 refund. Definitely not chump change. The proper way to obtain the refund is by claiming a credit on your tax return (I assume it is claimed on the New York state tax return) that is filed for that year. If this is something that you failed to do for any mortgages you refinanced or obtained over the past several years, you are not completely out of luck. There's a three-year statute of limitations on obtaining a refund. However, for any past tax years you would then need to file an amended return. Depending upon the amounts involved, this is something you may consider taking advantage of.

Graffiti Removal Program:

A new law recently went into effect (Local Law 65-2009) that fast tracks removing graffiti on buildings in New York City, and makes it easier for business owners and residents to get it removed at no cost.

How the graffiti-free process works: the new law went into effect on April 7, 2010, and the Administration has been focused on smoothing out technical issues that might arise as the 35-day notices are sent in to city government. The highlights of the law are:

If you’re the owner or authorized representative of a property, you can request free removal of graffiti on your building by filling out a Forever Graffiti Free form here. (Forms are also written in Spanish and Chinese).
If you see graffiti on someone else’s property, call 311 to report it.
If graffiti is observed on your building and you do not already have a Forever Graffiti Free form or waiver in the City’s system, you’ll receive a “Notice of Intent to Clean” from the Department of Sanitation.

This notice will explain that you have three options:

You can inform the City that you want to clean the graffiti yourself. Call 311.
You can inform the City that you consent to the markings identified as graffiti on your building, for whatever reason. Call 311.
If you don’t take either of those two steps, the City will route your property for cleaning after 35 days.

A few things to note:

The City of New York will send the “Notice of Intent to Clean” to all addresses on file for the property, checking all City databases (DOF, HPD).
Property owners or representatives can request a 15-day extension, if they need more time to make up their minds.
If you already have a waiver or Forever Graffiti Free form on file, you don’t need to fill another one out as long as you own the property.

Here are more detailed FAQs.

Sierra in the news

2010-03-19T17:45:00.002-04:00

Emily Geminder in The Commercial Observer has a nice mention of our lease with pastry chef François Payard and his new shop in Greenwich Village. The 8,000-square-foot bakery and cafe on West Houston Street will come to a neighborhood that is, as our own Peter Braus said, "renowned for its great culinary personalities." Sierra is the exclusive broker for the Y&H-owned building. Ruth Shnay, also of Sierra, represented Mr. Payard, along with independent broker Nevin Danziger, in the negotiations for the 15-year lease.

Delicious news!

Articles 2.03.10

2010-03-03T12:20:00.002-05:00

Two interesting articles.

From the New York Housing Journal: deadbeat tenants getting you down? Believe it or not, there is something you can do to deal with the deadbeat tenant that only pays rent once you start legal action. Check out "How to Win A Chronic Nonpayment Case."

And from Time Out New York: "100 Best Things... You Must Eat and Drink."
Prepare yourself for the finest burger in the city, plus life-changing fired chicken, pizza, sea-urchin toast, and caramel-chocolate popcorn.

Buzz Words du jour

2010-02-26T16:28:00.003-05:00

Our industry, like many others, loves buzzwords.

Often, a lot can be read into these buzzwords besides just their intended meaning. Probably the buzzword that best exemplifies a word or phrase that has meeting way beyond that which was intended is the phrase "burn rate."

For those of you with short memories this phrase came to prominence during the dot com boom and referred to the rate at which unprofitable "new economy" (another buzzword rife with unintended meaning) companies were burning through their capital.

Unbelievably, at the time this was not necessarily meant to be a bad thing but just another metric to be considered in valuing a business. However, in retrospect and with the value of hindsight, it is clear that this buzzword signified the mania of an era.

Similarly the term "capital stack" (sorry, but it makes me think of pancakes) is a recent real estate industry buzzword that has similar significance. It refers to the many layers of equity and debt and hybrids of each that are created as part of the "financial engineering" (another great buzzword) to allow developers and property entrepreneurs to acquire huge amounts of real estate with little or none of their own money.

What this innocuous term really signifies is a transaction that is so overly leveraged that the capital stack is in danger of collapsing. This buzzword pretty much sums up the last five years of our industry.

The Law of Unintended Consequences

2010-02-26T16:27:00.002-05:00

During a period of economic downturn and increasing unemployment, it is important to consider the many obstacles to economic growth that have been created by well-meaning laws meant to address a whole host of societal problems.

While many laws have been passed that on the face of it serve a very high moral purpose, often they have an unintended consequences that can stifle economic growth and, ultimately, cause more of a problem than the evil they were meant to address.

Anyone who has managed a business over the past 20 years has witnessed how the landscape of employer/employee relations has changed to the point that the ability of a company to manage employees has become so fraught with potential litigation etc., that hiring decisions are influenced by the potential "litigation cost" of each employee. All it takes is for one grievance or lawsuit to be filed by an employee against an employer for that employer to allow future hiring decisions to be affected as result.

Because of the breadth and magnitude of well-meaning laws enacted to protect employees and various classes of individuals it is difficult, if not impossible, to run a company for any period of time without at some point being sued. Compounding this problem is that the bar is so low for an "aggrieved" employee to file a claim or initiate a lawsuit against a employer that many claims are filed and suits commenced that have little or no merit.

And while these claims may ultimately be decided in favor of the employer, the employer still incurs significant expenses to defend these actions. Almost every small business owner I know has had such an experience. Recently, an organization I support suggested supporting a law that would require employers to allow employees to take time off during the course of the day to attend parent teacher conferences at their children's school.

While I am sympathetic to this as an employer and would allow my own employees to take time off for such purposes, I objected quite strenuously to supporting a law which would mandate that employers grant such leave. I felt very strongly that inviting the government to micromanage how businesses function in this manner only ultimately acts as a disincentive to hiring and that the law should not be supported. In fact, rather than enacting new laws now that will stifle business and economic growth our politicians should focus eliminating existing laws that discourage hiring and are of marginal utility.

Falling Water

2010-02-26T16:26:00.001-05:00

Falling Water: Not your typical Tudor, colonial or ranch style house, "Falling Water" is a Frank Lloyd Wright masterpiece. Watching this video will help you truly appreciate the genius of his architectural style.

Interesting news from around the city

2010-02-26T16:13:00.008-05:00

Trailer Park Hipsters: you have to admire the entrepreneurial spirit particularly when it comes to real estate in New York.

I remember the "beach barge" that several years ago some nightclub operators created by pouring sand in a barge and mooring it to the Manhattan side of the East River. It lasted about five days before the city shut it down. I was not surprised then when I heard that some fledgling young real estate moguls decided to create a trailer park in an old warehouse in Bushwick.

I decided to take a look for myself and drove out there one Saturday morning. It was difficult to locate since it's behind an unmarked door. However, when I got inside I found half a dozen broken down trailers set up with numerous twentysomethings milling about.

"Interesting," I thought. When will the city shut them down?"

As it turns out, while it lasted little bit longer than the beach barge, the trailer park was recently shut down by the fire department.

Click here for a trip around the world, guaranteed to make you smile!

I particularly like the bearded guy in Paris.

Another sign of the times: one imaginative and entrepreneurial company seeking to take advantage of a terrible real estate market has taken a chapter from those airport vendors offering to wrap your suitcase in plastic and are offering to wrap unfinished condominium construction projects in plastic so that they can be put on hold and resumed later.

John Szoke Editions in the New York Gallery Building

2010-01-25T16:03:00.005-05:00

Another nice mention of our own Sierra Realty Executive Vice President Peter Braus: he secured a long-term lease on the third floor of the New York Gallery Building (on 24 West 57th Street) -- a beautiful Art Deco building -- with John Szoke Editions. Read the whole story here.

Happy New Year!

2009-12-30T10:56:00.001-05:00

A happy and prosperous New Year to you!

Sierra in the News

2009-12-30T10:07:00.004-05:00

Real Estate Weekly has a nice mention of our closing on the long-term lease of the third floor of the New York Gallery Building, 24 West 57th Street, with John Szoke Editions (their website is here); and a nice note -- with photo -- of REBNY's November Retail Committee Luncheon with our own Peter Braus here.

Our friends at New York Real Estate Journal mention that we've been appointed managing and leasing agent for 648 Broadway, ten stories and 50,000 square feet of cast iron -- it's an amazing space. The landmark 19th building is at the convergence of the most vital downtown neighborhoods: SoHo, Washington Square, the East Village, and NoLiTa.

Real Estate Weekly mentions in their Who's News section that Shane Neuringer has joined the Sierra Realty Corp team as senior vice president of acquisitions and finance here; and that Stephen Carter, licensed broker and property management specialist, has joined us as senior vice president of residential property management here.

The New York Real Estate Journal also notes Stephen's hire here, and Real Estate BizNow mentions Shane's hire here.

Thank you to all our friends!

Happy New Year!

Articles 11.30.09

2009-11-30T15:14:00.005-05:00

A call to action! The last mayoral election should have been a wake-up call to all of us in the real estate and business community. The Working Families Party has demonstrated their ability to raise money and organize voters to support their candidates. For those of you unfamiliar with the Working Families Party they are a union supported organization whose agenda is very detrimental to the real estate and business community of the City. Two candidates they supported in the Democratic primaries, John Liu, Comptroller, and Bill De Blasio, Public Advocate, won by very decisive margins. We have a choice. We can either complain about the results or we can become more active and make our voices heard. Believe it or not (and it is hard not to be skeptical) elected officials are influenced by the communications they receive from their constituents. REBNY has made it extremely simple for us to register our views with our elected officials. I urge all of you to go to their website and start participating in the democratic process. We need to make our voices heard! Currently, there is a proposal before the City Council involving the regulation of commercial rents. Visit the REBNY Action Center website and register your opposition to this pending legislation.

For the architectural critics among you, two recent postings on the Curbed.com website should be of interest. They list the 10 best buildings constructed in 2009 and the 10 best non-buildings of 2009.

And for those of you who like a dose of fantasy mixed in with their architecture take a look at these cities of the future.

The silver lining award: if you look hard enough you can always find a silver lining in every cloud. The silver lining during this downturn is that Bob Knakal has had the time to write some of the most thoughtful and illuminating articles about real estate issues that I have read in a long time. The two that I have enjoyed the most are "A 25 Year History Holds Clues to Multi-family's Future" and "The Value of a Building These Days." Both of these articles are essential reading for all of us in the real estate industry.

Sherlock Holmes would be proud. Next time you inspect an apartment in one of your buildings take this handy guide with you ("The Apartment Inspection Checklist"). It will give you a better idea of what to look for when you inspect a tenant's apartment.

Interesting fact of the month: the population of New York City increased by 293,000 people between the years 2001 and 2008. This increase is equal to the size of the entire City of Pittsburgh.

Another terrific blog. For anybody who is interested in food, travel and New York City check out Travel and Food Notes. Besides being wonderfully written by my wife, it contains great information about local restaurants and points of interest.

It is going to get worse before it gets better: Related to my first posting above, I'm concerned about the direction in which fiscal policy of both our State and City are headed. Both our state and local government have demonstrated repeatedly over the past several years the inability to make any headway against our looming deficits. Why is this? The comments by Dick Ravitch at a recent forum are dead on.

First, Ravitch said no incumbent of either party thinks he can win an election by supporting cuts to health care and education. He said it as a statement of fact, not judgment, but it amounts to a complete explanation for why the relatively modest trims Gov. Paterson proposed were rejected by the Legislature. Health and education spending are expanding entitlements that have become the third rail of New York politics, which is why Republicans have followed Democrats in abandoning fiscal restraint.

Second, he said unions have outsmarted the business community, with the result that spending is almost impossible to cut, even in a recession. Ravitch didn't say so directly, but the net effect is that pols would rather raise taxes than the hackles of unions. Put another way, no politician fears losing his job because business is unhappy. As Pataki added, any plan to cut spending gets a press release of approval from business leaders and $10 million worth of attack ads from unions.

Third, Ravitch said complaints by business leaders that the city spends and taxes too much are bizarre given that one of their own has held City Hall for eight years. It was a sly jab at those who blame the unions for unchecked government growth while acting as if Michael Bloomberg has played no role. Spending under Bloomberg is about 30 percent above inflation, the sort of record that helped make David Dinkins a private citizen.

By being unable to cut spending, our local and state governments face only one alternative, to increase taxes, fees, fines etc. The article "Spending an End to New York's Nightmare" eloquently describes the problems that this creates. By putting itself in a competitive disadvantage New York has had a net loss of over 200,000 high income individuals over the past decade. If this trend continues, New York will dig itself into an even deeper hole as its tax base continues to erode thus putting further pressure on our governments’ to either cut spending (which is unlikely) or continue their ill-advised policy of increasing taxes. A self perpetuating death spiral in the works. When will this end? Either when we are bailed out by a booming economy or we reach a crisis that requires us to take serious and drastic action or (preferably) enough of us get sufficiently fed up with this that we actually decide to do something about it.

Sierra in the News

2009-11-30T14:46:00.003-05:00

Crain's New York Business reporter Amanda Fung has an interesting story about artists moving to Midtown and Midtown South as asking rents in SoHo and Chelsea become too expensive. She quotes our own Peter Braus:

“SoHo has been dead for a long time for gallery business,” says Mr. Braus, who just this month helped contemporary art gallery John Szoke Editions move to APF Properties' 24 W. 57th St. after 30 years in SoHo.

And the New York Real Estate Journal mentions Peter Braus and Peter Levitan new long term retail lease at Penn Tower, 132 West 31st St., with Savvy Fashion Handbags.

"Penn Tower is the ideal location for Savvy Fashion Handbags," said Braus. "The company has both retail and wholesale divisions, so it is fitting for them to be steps from both Herald Sq. and the Garment District."

Sierra represented the owner, C&K Properties.

Thanks to Crain's and to New York Real Estate Journal!

Sierra in the News

2009-11-23T15:04:00.004-05:00

Real Estate BisNow has a mention of John Szoke Editions' long-term lease for the third floor of 24 W. 57th St. Sierra Realty Corp.’s Peter Braus represented the tenant, while Promenade Real Estate Corp.’s Steve Pressler represented owner APF Properties.

Real Estate Weekly also mentions our new hire, Stephen B. Carter.

The Mann Report has a very nice article on the amazing Marianne Thorsen, our new Senior Managing Director. We are thrilled and delighted that Marianne, one of the city's most high-profile and creative professionals has made Sierra her home. Please join us in welcoming Marianne Thorsen!

The Mann Report is also kind enough to mention our new lease at 267 Lafayette Street (on the corner of Prince Street) with terrific clothing and shoe retailer Flight Club.

Thanks to Real Estate BisNow, Real Estate Weekly, and The Mann Report!

Sierra Realty awarded exclusive agency for 229 East 60th Street

2009-11-09T17:51:00.003-05:00

The Mann Report mentions that Sierra Realty's own Jeffrey Anderson and Barry Sanet have been awarded exclusive agency for 229 East 60th Street, an elegant brownstones between Manhattan's Second and Third Avenues. The space is used for offices and lovely galleries and showrooms. Congratulations to Jeffrey and Barry!

Executive Moves

2009-11-09T17:46:00.001-05:00

Crain's New York Business kindly mentions our new hire, Stephen B. Carter, who was appointed senior vice president of residential property management. He joins Sierra Realty from Manhattan North Management, where he had been vice president and director of property management. Please join us in welcoming Stephen!

Sierra in the News: More for Less

2009-10-30T15:21:00.002-04:00

Read this interesting article in Crain's by journalist Adrianne Pasquarelli.

Restaurateur and nightclub owner Frederick Lesort is at it again—but this time, he’s setting his sights a bit lower.Mr. Lesort, who filed for bankruptcy protection for his Frederick’s Madison eatery in April and closed Frederick’s Downtown over the summer, is starting a French eatery where everything on the menu will cost less than $20. His plan is to cater to cost-conscious NewYorkers.

Sections of Broadway in Times Square and Herald Square, as part of the city’s initiative to curb congestion on streets and sidewalks, and many hope the changes will also increase business for area retailers. The thoroughfare, from 47th Street to 42nd Street and from 35th Street to 33rd Street will be closed to all vehicles, becoming a pedestrian walkway featuring chairs and benches.

Good news for these retailers in difficult times!

Sierra in the news

Owners and tenants wrestle over rent reduction requests

2009-03-17T12:41:00.005-04:00

I am quoted extensively in the March 2009 Florida Loan Specialist Weblog about the ongoing issue of rent reductions for retailers in these rocky times.

And in Manhattan, Sierra Realty Corp. President Jim Wacht is dealing with a local retailer that is downsizing from 11 stores to seven stores as part of its bankruptcy reorganization. “This retailer is using bankruptcy to cherry-pick the leases and has basically given its landlords an ultimatum–the stores that will stay open are the stores that have the lowest rents,” he says. “They’re really putting the screws to the landlords, and if my client loses this tenant, it’s really going to cost him. He feels like he has no choice.”

It's an excellent, useful article.

Articles 03.16.09

2009-03-16T15:52:00.003-04:00

There's little to be cheered these days if you are a developer with a project under construction. A small silver lining-construction unions and construction contractors are now willing to negotiate some of the more onerous provisions in their contracts. See the article "Fear and Grouting in New York."

For a case study of how a pro-business, pro-development strategy can help turn around an economically depressed area one only needs to visit the Bronx (who would've thought!) and read the article "The Bronx is up."

What can you learn by looking at ridership numbers for the New York City subways? You would be surprised. Take a look at the article "NY by the Numbers" to really get a sense of where growth has occurred in the five boroughs over the last 10 years. Ridership at some of the fastest growing stations has increased over 700% over the past 10 years.

"Soaking the Rich" outlines the combined magnitude of the proposed increases in the local, state, and federal tax rates. This is not for the faint of heart. I do not recommend reading this at the same time that you're reviewing your most recent brokerage statement. Such large tax increases coming at the same time as a substantial decrease in net worth for the wealthy will not be healthy for the economy. If consumer spending is what will lift us out of this economic slump, tax increases of this magnitude on those who historically are this country's largest spenders will only further discourage spending and exacerbate an already dire situation.

For those of you who know me, you know that I am a music nut. My tastes tend towards hard bop jazz and rock 'n roll. It's always interesting to see lists of what people consider that the top music albums of all times. For the 75 albums that Esquire Magazine (not too sure who reads this anymore, my wife sent me this link) think every man should own check out this link. Actually, many of these albums are superb and don't typically find their way on most peoples lists.

NYC Tenant Advantage

2009-03-10T14:21:00.004-04:00

In the New York Real Estate Journal, SRC's Peter Braus explains how, in negotiating a restaurant lease, tenants have the leverage.

Click here to read the article.

Articles 02.23.09

2009-02-23T17:06:00.002-05:00

Many cities in the United States have watched their downtowns and urban centers deteriorate as large shopping and power centers are constructed on their periphery. European planners, however, have used shopping centers to help revitalize the downtown areas of their cities. For more on this read the article "Revitalizing Urban Centers through Retail."

"Store Closings" is very simple. It is a master database setting forth stores that will be closing over the next year.

I've always been critical of federal and state policy that has promoted the suburbanization of America at the expense of inner-city investment. What is ironic is that high density city living is far more "green" than suburban living. Read the article "Green Cities, Brown Suburbs" to learn why New York City is one of the "greenest" places in America.

Forget "Girls Gone Wild." To really experience debauchery and drunken behavior see the article "Condos Gone Bad."

Despite the tough economy deals are getting made. My partner, Peter Braus, recently authored the article "Wooing Tenants in a Down Market" which outlines strategies that property owners can adopt to adapt to the realities of the current market.

When you're at a dinner party, do you put your olive pits on the bread plate to your left or to your right? You'd be surprised at how many people lack proper dining etiquette (me included)! The article "Dining Etiquette" will help you to avoid committing major dining faux pas.

Sierra in the News

2009-02-23T09:17:00.008-05:00

The Mann Report has an article up about this humble blog. We were also mentioned in Brokers Weekly and Real Estate Weekly. Thank you!

Articles 01.30.09

2009-01-30T11:35:00.005-05:00

To understand the magnitude of the issues facing our city over the next several years it is instructive to understand what happened in previous downturns. “Future of NYC: How Bad Will It Get?” provides an invaluable history lesson. When reading this article keep in mind that current predictions are that the City will lose a total of about 250,000 jobs by the middle of 2010 although this number has been climbing every month.

For those of us who have been compelled to sit on the sidelines the last couple years while the spreadsheet cowboys have been chasing deals with cheap money, the article “Return to Fundamentals in Time of Crisis” is a breath of fresh air. Isn't this how deals were always supposed to be done?

“London and New York in the 21st Century” is an interesting analysis of what these two cities must do over the long term to maintain their stature as the foremost commercial centers of the world.

For the brave souls among you who would like to celebrate The Year of the Ox, “Fine China” offers recommendations for several restaurants in Manhattan's Chinatown. Enjoy!

Economic Indicators for Dummies

2009-01-29T20:27:00.004-05:00

Economic Indicators

Every day we are barraged with news stories touting all the various economic indicators that economists and other business and social scientist types like to refer to as a guide to how badly our economy is doing. For the most part these economic indicators read like a laundry list of all those things that caused your eyes to glaze over and you to lapse into a head bobbing, drooling stupor in Economics 101. So in an attempt to devise my own economic indicators I've come up with the following lists. Please feel free to make recommendations for other items that should be included:

Leading Indicators of an economic decline

1. Cocktail conversations sprinkled with any of the following words or phrases:

a. "burn rate" (remember that one? My all time favorite)
b. "new paradigm"
c. "new metrics"
d. "traunch”
e. "mezz financing"

2. men getting plastic surgery

3. Condominium developments that include such amenities as dog spas, billiard rooms (ever notice how the cue sticks never last more than one week), and lap pools.

4. The sale of derivatives and other securities that only those with a degree in physics from either MIT or Princeton can understand. Good luck to any broker peddling this stuff to really explain the risks to their customers.

5. A proliferation of glossy magazines containing 350 pages of ads featuring hot young models younger than your kids wearing clothes that nobody in their right mind would ever wear and only three pages of content.

6. Restaurant dishes containing at least three ingredients that you never heard of, written on menus in type so small that most of us require a magnifying glass and flashlight to read.

7. Yoga studios on every corner

8. Botox

9. $4 cups of coffee

Trailing Indicators

1. The reappearance of squeegee men and graffiti

2. a proliferation of sidewalk preachers urging us to repent

3. Being able to get a table without a reservation at a trendy neighborhood restaurant on a Thursday night.

4. Snooty salespeople becoming polite and friendly.

5. Increased beer sales.

6. Availability of taxi cabs during rush hour on a rainy night

7. Your son's bar mitzvah fund has more money than Bear Stearns, Citibank and the country of Iceland, combined.

The Real Deal Interviews Peter Braus

2009-01-28T15:28:00.008-05:00

New York real estate news magazine The Real Deal's reporter Adam Pincus interviews Sierra Realty's own Peter Braus.

Peter Braus, executive vice president and principal at property owner and manager Sierra Realty, said tenant brokers have more leverage in the commercial leasing market today as vacancy rates rise and new tenants are hard to find.

Click here to read the whole thing.

Excelling in Tough Times

2009-01-26T13:36:00.006-05:00

The next several years will present serious challenges to all businesses. With unemployment rates rapidly escalating, banks cutting off credit, and consumer confidence plummeting, many businesses will fail or see their revenues significantly decrease. By adopting the right approach and attitude, however, a handful of businesses will be able to take advantage of the opportunities this market presents them and will strengthen and grow their businesses during these times of economic contraction. What can you do to strengthen your business over the next several years?

For a printable checklist for how to excel in tough times not only in the New York Real Estate industry but all businesses, click here.

Reduce Expenses: Review every recurring expense and aggressively renegotiate pricing and credit terms with your vendors. Many vendors would rather reduce their prices or loosen credit terms then lose business. If necessary, switch vendors to those that will provide you with better pricing. Rent is often one of the biggest recurring expenses that a business incurs. Review your lease and evaluate your options for obtaining a rent reduction from your landlord. If your lease is expiring soon, take advantage of the decline in rent rates and aggressively shop for the cheapest possible deal. You may ultimately renew with your existing landlord but having market information available to you and offers in your pocket will let you negotiate the most favorable deal. An experienced and reputable real estate broker can help you here.
Employees: For an employer this is now a buyer’s market. Take advantage of it. Take a hard look at your employees and determine which are valuable and which are under performing. There is much talent out there to be hired. Upgrade the quality of your staff without incurring an increase in payroll.
Reconnect with your clients and customers: Don't take your existing clients or customers for granted. Contact each client personally and make sure they understand that you value their business. Each year I make a point of asking each of my clients to review the quality of our services. I meet with them personally to discuss their observations. Now more than ever you need to make each client feel as if they are the most important client of your firm. It is far easier to keep an existing client than to find a new one.
Evaluate any weakness in the quality of the work that your firm performs: Make sure that you are providing an exceptional product or service. Address any deficiency immediately. Replace any underperforming employees and, if affordable, upgrade your infrastructure.
Aggressively pursue new business: Many of your competitors will be impacted by this economic downturn. They may be required to make cutbacks in staffing, delay making much needed infrastructure upgrades or take other actions which may seriously compromise the quality of the work they perform. This is an ideal opportunity for the well-positioned firm to increase market share by picking up the dissatisfied clients and customers of these firms. How best to do this?
Marketing: This is not a time to scrimp on marketing. Use intelligent marketing through public relations, advertising, direct mailing, cold calling etc. to get the message out that you're still in business and provide a quality service.
Networking: Network like crazy. Attend events where you might meet people who could be potential customers. Let your professionals, vendors and existing clients and customers know that you're actively seeking new customers. Perhaps there are people they can refer you to. Don't be shy! And make sure that all your contacts are aware of all of the lines of businesses and services you can provide. Sierra Realty provides a full spectrum of leasing brokerage and property management services. It is surprising how many of our leasing brokerage customers are unfamiliar with our property management services and vice versa. We continually need to educate them so that they can refer new business to us. Don't assume your clients know everything that you do.
Leverage your relationships: Use the business that you give your vendors and professionals as a way of encouraging them to refer potential customers to you. When I hire a new vendor or professional I make it clear that I expect them to refer business to my company.
Incentivize your employees: Think about giving your employees incentives for finding new business for the company. Make your employees "partners" in your enterprise. Incentives can range from gift certificates to a percentage of the business they initiate.
Get involved: I urge every one of my executives and employees to get involved in organizations outside of work. These can be religious organizations, alumni organizations, charitable endeavors, community groups, sports leagues, political clubs, reading groups etc. The list is endless. Not only can it be amazingly gratifying, it is a great place to develop relationships with people who might be able to refer business to your company.

Tough economic times are difficult for all. The uncertainty of what is to come can unnerve even the most seasoned of business executives. Yet by following some of the steps outlined above and taking a proactive approach to the economic downturn, a savvy business owner can not only survive this market but emerge from it a stronger and better company.

Articles 01.09.09

2009-01-09T16:14:00.003-05:00

"Stress in the City” offers a quick snapshot of what's in store for 2009. While these numbers are cause for concern they must be kept in perspective. It is projected that the city will lose 175,000 jobs over the next one or two years. While this is a very high number it is lower then the 225,000 jobs that were lost in 2001, the 325,000 jobs that were lost in the late 1980s and the 610,000 jobs that were lost in the 1970s.On the other hand, it feels to me as if the City's economic circumstances are far worse than they were in 2001. Let's hope that job losses do not exceed the 175,000 jobs that are currently projected to be lost.

Now for some good news: a recent Appellate Division, second Department decision determined that a residential landlord has no duty to mitigate damages arising from a tenant's lease default. See the article "Damages" for the full text of the decision.

In a divided decision, Appellate Division, First apartment has reversed a former decision that allowed residential landlords to terminate the lease of a tenant that is subletting her apartment for an excessive profit. For the full text of the decision, see "Roommate Profiteering."

For the foodies among you, I include the article "The Simpler Pleasures," which is New York magazine's list of where to eat in 2009.

Articles 12.18.08

2008-12-18T13:58:00.008-05:00

It seems only a matter of time before the current economic conditions affect Manhattan and outer borough apartment rental market. The article How Many Apartments Are too Many? discusses the current state of the Manhattan apartment market. Reports about the outer borough apartment market are sketchier. However, based upon my discussions with outer borough landlords it appears as if the outer borough apartment market is holding up better than the Manhattan apartment market.

People often ask, "What is the rental rate for my office or store space?" In today's market, it is an exceedingly difficult question to answer. The article Asking Rent Agonistes further describes this problem.

The Garment Center as the focal point for the garment trade has been dying for several decades now. Its demise has been postponed by zoning that attempts to preserve manufacturing space. It appears, however, that the garment center is soon to be removed from life support. See the article Union, City Sew Tentative Deal on Garment Center Future.

Giant and Jets fans! Have any of you wondered when that horrible monstrosity that is being constructed next to the Meadowlands will be completed? Construction has been going on for years and has been incredibly disruptive to traffic and parking. For those of you who are curious, check out the article Meadowlands Xanadu in New Jersey.

Finally, what will happen to all those bank branches that sprouted up all over the city during the past 10 years? Their possible fate is described in the article It's a WashMu!

Articles 11.14.08

2008-11-14T17:01:00.004-05:00

Okay, so conduit lenders have disappeared, banks are getting finicky, and life insurance companies are sitting on the sidelines --where does one go to get mortgage financing? Read the article The New Lehman's to find out.

Remember the good old days when it was the borrower who defaulted? Lender Defaults describes what a borrower should do when the tables have been turned and it is the lender who is defaulting.

Will Obama with his urban agenda but proposed tax increases be good or bad for New York? The answer can be found in What Obama means to New York.

Building and Staff Performance Reviews

2008-11-11T09:18:00.003-05:00

Knowing and understanding your building is critical to its success. Owners that self manage one or two buildings have a huge advantage in this regard. They are frequently at their buildings and generally know every tenant on a first name basis. Larger property owners and those that must delegate responsibility to a staff do not have this advantage. How then can a larger property owner or property manager truly understand what is going on in their buildings?

Sierra Realty has implemented an annual review process that goes a long way to solving this problem. Each year we send out a questionnaire to every one of our tenants asking them to rate their building, building staff, management staff, etc. The questionnaire also solicits suggestions about what can be done to improve the building. When we first started doing this, we figured only a small percentage of tenants would respond and probably only those that wanted to complain would take the time. I've been very surprised at the level response that we receive. Over 20% of our tenants respond and usually provide very favorable and valuable feedback about the building. As result, we have been able to obtain a far better understanding of how our buildings operate and our staff function.

Articles 11.04.08

2008-11-07T14:09:00.002-05:00

Our most recent batch of articles focuses on the retail sector.

For those of us who've gotten tired of the typical fast food fare (McDonald's, Panda Express, Wok N' Roll) found at local shopping centers "Food Courts for Food Lovers" describes the recent and welcomed trend of replacing traditional food courts with higher end food courts focusing on comfort, atmosphere, and fresh food.

The story "Incentive Enough" describes the unscrupulous accounting trick that one recently bankrupt retailer, Steve and Barry, used to artificially inflate their earnings.

Those of you with empty retail space will be interested in the article "Vacancies to cash cows" which describes how vacant stores can easily be converted into valuable ad space.

Next time you spend 15 minutes lost in a multi-tiered parking structure, think about the article "Beyond Valet Parking". This describes a high-tech parking system that reduces parking time by up to 55%.

"Developers cut 2008 pipeline by one third": does this is article really need an explanation?

Articles 10.31.08

2008-10-28T15:31:00.003-04:00

I've put another batch of news clippings relevant to the New York realty market and outlook on the website. Check them out!

A Silver Lining?

2008-10-01T09:54:00.002-04:00

OK. The sky is falling, right? Yeah, it pretty much is.

But that doesn’t mean it needs to fall on you.

This is when savvy retailers who’ve been sitting on their money can go out and snag some prime storefronts that have eluded them over the past several years. Why? Because the players who were snagging those stores out from under you are now reeling. They’re the chains, and they are getting killed in just about every market (with the possible exception of Manhattan, where tourism is keeping retail afloat).;

We’ve all seen this first hand: first, Starbucks announced closures, then the banks started going down (WaMu followed by Wachovia followed by ???). What this means is that the landlords who thought that it would be as easy as putting up a sign and waiting for calls to roll in are now scratching their heads.

I know a space only a block from the Flatiron building where the landlord has dropped the rent twice in the past 3 months – from $25,000/mo., to $19,000 – and now $16,000. And it’s a nice space!

The bottom line is that this awful, gut-wrenching recession could have a silver lining for some of our smart NYC players who’ve been saving their pennies for a rainy day.

-Peter Braus

How to Create Affordable Housing Now at No Cost

2008-07-21T10:37:00.002-04:00

Mayor Bloomberg has proposed a far-reaching plan to create a total of 165,000 units of affordable housing by the year 2013 at a cost of 7 1/2 billion dollars. This plan has been described as "the largest municipal affordable housing plan in the nation's history ". As commendable as this goal may be, there is a far cheaper way of not only achieving this goal but of exceeding it.

It has been estimated that there are currently one million to 1.1 million units of rent regulated housing in New York City much of which is renting at a below market rents. As the most recent revelations concerning our governor and one of our congressmen have revealed many of these units are occupied by those who are not in need of affordable housing. The current system of rent regulations provides no form of "need test" to qualify those who receive these apartments. If just one in 5 of the existing rent regulated apartments are occupied by those who could otherwise afford market rate housing then if we were to require a " needs test" for those in rent regulated apartments, we could free up over 200,000 units of housing and make them available for those in need. The cost? Zero dollars. Obviously, this would be incredibly disruptive in the short term so if such a system were to be implemented, it should be phased in over a period of time.

Rent Regulations: The Cost of Good Intentions

2008-07-21T10:16:00.002-04:00

When first enacted our system of Rent Regulations was intended to relieve the housing shortage created by World War II. Since then its purpose has expanded to include the creation and preservation of affordable housing. While this is indeed a laudable goal and necessary for the health of our city, an examination of the cost of rent regulations reveals that as well-intentioned as the system may be, rather than creating and preserving affordable housing the system instead has had just the opposite effect.

In previous blogs I've estimated that New York City's system of rent regulations is costing almost $2 billion per year to operate. According to city budget estimates, it costs the city $50,000 to create one unit of affordable housing. Assuming that this $2 billion a year of lost revenue could be leveraged to create an annual $10 billion pool of investment capital then the city would be able to construct 200,000 units of affordable housing every year if our system of rent regulations was eliminated. When you compare this to Mayor Bloomberg's ambitious plan for affordable housing which calls for the construction of a total of 165,000 units by the year 2013at a cost of $7.5 billion (and which has been described as "the largest municipal affordable housing plan in the nation's history ") it gives you some idea of the opportunity lost to the city every year as result of the operation of our system of rent regulations. Further, if the system were eliminated altogether tomorrow, the one million units of housing that are now regulated by the system could be completely replaced by newly constructed, better quality housing, within five years!

Rent Regulations and Affordable Housing

2008-07-17T17:11:00.003-04:00

One of the most compelling arguments advanced by tenant advocates in support of rent regulations is the need to preserve affordable housing in New York. However, one question that never appears to be answered is "affordable for whom?" The regulations do not answer this question. This argument would be far stronger if there was some provision in the law that insures that rent regulated housing is preserved for those who can not afford market rate housing. This is not the system however. As the recent articles detailing the favorable rent deals that our governor and esteemed Congressman (for 4 apartments no less! ) receive many of those who benefit from rent regulated apartments do not require such favorable treatment. While the law may preserve affordable housing, it is not necessarily preserving it for those who need it. This is a one of the major flaws with this system that s needs to be corrected.

Disfunctional Court System Stifles Retail Development

2008-07-15T21:38:00.002-04:00

New York City has one of the most dysfunctional landlord tenant court systems in the country. It is a system that easily permits tenants who fail to pay their rent to continue in possession of their stores for many months if not years after they stop paying rent. The simplest of uncontested court cases take a minimum of four months to resolve. It is no wonder then that landlords are reluctant to accept this risk and consequently either rent desirable store locations only to well-known chain and national tenants or require significant security deposits from mom-and-pop tenants. Perhaps if the court system could be reformed so as to ensure a measure of certainty and expediency to landlords this risk could be reduced and landlords would be more willing to rent desirable stores to a wider selection of tenants. Instead of every street corner then being occupied by a Starbucks, Duane Reade or bank branch perhaps we could then see more interesting stores operated by entrepreneurs and startups.

Cost Of NYC Rent Regulations (cont.)

2008-06-23T17:16:00.002-04:00

I initially estimated lost real estate tax revenues of $1 billion. When you factor in other lost tax revenues including income tax (federal, state and local), mortgage recording taxes and transfer taxes this estimate increases to $1.8 billion per year. If this amount can be leveraged by four dollars for every one dollar invested, this would create a $9 billion pool of capital that could be made available every year for the construction of affordable and workforce housing.

The issue with respect to rent regulations is whether the current system is the most effective way of creating and maintaining affordable housing in New York City. Given the large sums of money involved, it is worth a hard look.

Cost Of NYC Rent Regulations

2008-06-18T15:05:00.002-04:00

I have never seen an analysis as to the annual cost of the current rent regulation system in New York City, but by my own estimation the city is losing at least $1 billion a year in lost real estate tax revenues due to apartment rents being kept at a below market level. This $1 billion shortfall would be sufficient to fund the construction of 20,000 units of affordable housing every year.

This estimation is based upon the existence of 1.1 million rent regulated apartment in New York City and the assumptions that each rent regulated unit rents at an average monthly rent of $400 below market (this seems reasonable, but needs to be verified), and that real estate taxes generally are 20% of the gross rents of a building. Based on these figures, the city is foregoing the receipt of $1 billion per year in real estate taxes because of the existence of rent regulations. In essence, the city is spending $1 billion a year to provide rent subsidies to individuals regardless of their need.

The most public example of the ludicrousness of this system is the rent subsidy our current governor is receiving. It has been reported that Governor Patterson lives in a $1200 per month apartment that has a market rent of $2600. Because of the existence of rent regulations, the governor is receiving what in essence amounts to a rent subsidy that costs $3360 per year in lost tax revenues. Do we really believe that our governor needs a rent subsidy that costs taxpayers $3360 per year?

This $1 billion in lost tax revenues represents about 2% of the current annual city budget of $59 billion. In addition, assuming it costs approximately $250,000 to build one unit of affordable housing, $1 billion a year could be used to finance the construction of 20,000 units of affordable housing every year (assuming 80% financing).

This analysis does not even include the cost of operating and implementing the system of rent regulations nor the lost income and capital gains taxes to the City, State, and Federal governments due to the fact that the annual net operating incomes of rent regulated buildings are also artificially depressed due to the existence of rent regulations. If these costs were included, the numbers would be even more compelling.